If you are an investor looking to diversify your investment portfolio, it is time you consider adding precious metals like gold and platinum to your lineup. Gold and platinum are two such precious metals and traditional assets that investors are turning to for benefits such as inflation hedges.
Even though they are both precious metals, they come with unique features, advantages, and disadvantages that make them suited for different investment needs. Unless you plan to invest in both, you are facing a challenge in deciding which one to go for. If this is the case, consider talking to a financial investment advisor who may help you make the decision. However, for any investment, information is vital.
You must conduct due diligence about each option and at least have some basic knowledge. In addition to being informed, it is essential to understand your investment needs and goals because it all comes down to long-term vs. short-term investment goals. In this guide, we will help you know the two precious metals so that you can make an informed investment decision.
We often think of gold as the most desirable metal and disregard platinum. According to the world platinum investment council, platinum is thirty times rarer than gold. Being a platinum owner makes you one of the few investors with this commodity. Due to its structure, platinum serves a variety of uses even though it does not share the same history as gold.
This precious metal is highly valued in the industrial setting because of its malleability and high density. The price of this commodity is determined by the forces of demand and supply in the industrial sector since its greater applicability is in this sector. Platinum can be traded in several ways, including in coins and bullion, stocks, options, futures on the New York Metals Exchange, and ETFs or mutual funds.
The value of gold dates back to the ancient days of civilization. Today, gold prices fluctuate according to the forces of demand and supply like platinum. It is used in industries like aerospace, dentistry, and electronics. Even though it has an industrial demand, it does not affect the price much as platinum.
Gold’s high demand stems from the investment sector and pieces of jewelry. Its ability to withstand economic pressures like inflations and recessions powerfully attracts investors. When there is a financial crisis or recession, the price will go up and vice versa. There are many forms of investment in gold, including physical coins and bars, mutual funds or ETFs, and stocks that invest in gold. Gold products are also sold on the New York Metals Exchange.
Key Differences Between Gold and Platinum
Gold and platinum are both valuable precious metals but with some key differences. For investors trying to deserve which metal to go for, these differences can help you make that decision. We cannot say one is better than the other; it depends on your investment goals.
Features & Characteristics
In the long term, gold and platinum move in the same direction. The differences in prices come down to the specific factors affecting each metal independently. Platinum takes the lead because of its dependency on mine production and industrial demand. Among precious metals, the price of platinum fluctuates the most.
If you are concerned about the suitability, gold is your option as it stands at the top. Gold’s intrinsic value reduces the likelihood of price drops. Since several countries produce gold, a supply issue in one country is less likely to affect the global supply. For this reason, investors turn to gold in turns of economic crashes and crises.
Both metals fluctuate in price, but gold is more stable than platinum. While gold may be used as an alternative currency, platinum is not.
The price of platinum fluctuates more often than gold since it is affected by the industrial supply and demand forces. However, this does not mean the price of gold does not fluctuate. It is also affected by industrial demand but more by investment needs and requirements at a reduced rate than platinum.
These two precious metals trade at different prices. Over the past, there have been instances when gold was trading at a higher price than platinum and vice versa. Up to the end of 2008, platinum was sold at a higher price than gold. Since 2011 the price of gold has been taking the lead over platinum, and this price difference is an inter-commodity spread.
Both metals are liquid since you can easily trade them for cash. However, due to its high volumes trading daily in the global market, gold is relatively more liquid than silver.
Advantages of Gold vs. Platinum Bullion
Each metal has different advantages. You can also use these differences to make your investment decision as an investor.
Gold Investment Advantages
Below are the advantages of investing in gold
- Stable and reliable prices
- It offers a hedge against inflation
- Withstands economic crises such as recessions and downturns
- Wealth protection and growth
- High liquidity
- Intrinsic value
- A good option for long-term investment
Platinum Investment Advantages
The following are the benefits of investing in platinum.
- Traditionally, platinum has traded at a healthy premium to gold
- You will be holding one of the rarest precious metals
- Performs well during times of economic recovery
- It offers a low-risk entry for investors
- Best for short-term investment and offers high returns
How Do I Invest in Platinum or Gold?
Investing in precious metals like gold and platinum start with deciding how you want to invest in these precious metals because there are several ways you can do so. Get a reliable dealer if you choose to invest in physical metals like coins and bars. There are many company gold companies, but this does not mean you can invest with any of them. Some are untrustworthy, and we recommend researching a company before dealing with them.
Some of the renowned and trustworthy companies that you can invest with are.
- Regal assets
- Noble gold
- Augusta precious metals
- Birch Gold Group
These companies will help your investment process from start to end. You will start by opening a self-directed IRA account, fund the account, decide on the metal to buy, choose a custodian and then buy your holdings. The professionals will provide you will all the necessary help and advice you need making the whole process more straightforward than you could ever imagine.
Decide based on your long-term and short-term investment goals. Gold is the better option for investors looking for long-term investment and stability. Meanwhile, in the short term, gold may not baa great hedge against inflation. On the other hand, for investors who want a short-term investment with more significant and immediate returns, platinum is a good deal as it performs better during economic growth.
However, its value comes with volatility; therefore, it is a suitable option for investors with a high-risk tolerance. Whether to invest in platinum or gold is ultimately dependent on the investment strategy, goals, and diversification needs of the investor. You can always seek the help of investment advisors who will walk you through everything about investment in precious metals and assist you in making a decision that will best suit your needs.